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Investment Opportunities in Indonesia for Automotive Industry

Tokyo, 19 November 2019


Wisnu Wijaya Soedibjo
Invesment Coordinating Board Republic of Indonesia
Indonesia Market Condition

2
Overview ASEAN and Indonesia Automotive Market

Source: MoI
3
Production of 4W or more Motor Vehicle in Indonesia
(2013 – Semester I 2019)

Based on Category
1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

-
`2013 2014 2015 2016 2017 2018 Jan-Jun 2019
SEDAN TYPE 5,091 39,658 61,499 29,644 30,202 25,807 12,851
4X2 TYPE 841,781 761,928 556,078 663,794 684,596 744,693 342,400
4X4 TYPE 24,831 26,528 29,766 19,378 19,818 24,133 9,080
BUS 4,702 4,105 3,873 4,769 2,500 3,460 1,567
TRUCK 136,746 120,014 70,747 64,283 88,036 118,142 47,638
PICK UP 140,167 161,232 199,715 140,269 145,183 166,338 62,271
DOUBLE CABIN - - - - - - -
AFFORDABLE ENERGY
53,050 185,058 177,102 255,660 249,834 261,170 115,924
SAVING CARS 4X2
PRODUCTION 1,206,368 1,298,523 1,098,780 1,177,797 1,220,169 1,343,743 591,731

Source: GAIKINDO
4
Sales of 4W or more Motor Vehicle in Indonesia (2013 – Semester I
2019)
Based on Category
1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

-
`2013 2014 2015 2016 2017 2018 Jan-Jun 2019
SEDAN TYPE 34,193 21,614 17,422 13,832 8,335 6,704 2,643
4X2 TYPE 788,148 679,856 549,684 608,034 596,839 634,372 266,358
4X4 TYPE 6,511 5,874 4,124 4,928 3,439 3,134 1,933
BUS 4,054 3,834 3,743 3,959 3,598 3,519 1,416
PICK UP 190,774 197,147 186,081 120,652 128,422 143,473 60,939
TRUCK 139,515 116,096 74,769 66,774 89,348 113,909 41,372
DOUBLE CABIN 15,436 11,487 12,034 9,344 13,667 15,730 6,124
AFFORDABLE ENERGY SAVING CARS 4X2 51,180 172,120 165,434 235,171 234,554 230,443 100,792
DOMESTIC SALES 1,229,811 1,208,028 1,013,291 1,062,694 1,078,202 1,151,284 481,577

`2013 2014 2015 2016 2017 2018 Jan-Jun 2019


CBU EXPORT (UNITS) 170,958 202,273 207,691 194,397 231,169 264,553 136,959

CKD EXPORT (SETS) 105,380 108,580 108,770 202,626 85,369 82,028 412,023

COMP. EXPORT (PIECES) 12,339,714 4,208,355 4,683,519 6,233,114 81,266,344 86,631,872 43,625,622

CBU IMPORT (UNITS) 153,920 104,503 82,533 75,571 87,693 84,148 33,974

Source: GAIKINDO
5
EV Demand Growth in Southeast Asia

37% of car buyers in


Southeast Asia consider
buying an EV as the
next car

70% of consumers will


switch to EV if charging
stations are installed in
apartment buildings

High awareness of EV
throughout Southeast
Asia

Source: Frost and Sullivan, Nissan, edited

9
Demand of Motor Vehicles in Indonesia

ITEM 2020 2025 2030 2035


Total (Unit) 1.500.000 2.000.000 3.000.000 4.000.000
Percentage
Production LCEV(%) 10 20 25 30
MOTOR
Percentage
VEHICLE LCGC (%) 25 20 20 20

Sales Total (unit) 1.250.000 1.690.000 2.100.000 2.500.000


Export Total (unit) 250.000 310.000 900.000 1.500.000

Total (unit) 7.500.000 8.800.000 9.800.000 10.750.000


Production Percentage

MOTOR
Electric Motorcycle 10 20 25 30
(%)
CYCLE
Sales Total (unit) 6.750.000 7.700.000 8.400.000 9.000.000

Export Total (unit) 750.000 1.100.000 1.400.000 1.750.000

Source: MoI
7
Indonesia Investment Opportunity for Automotive Industry

8
Automotive Industry Investment Opportunity in Indonesia

Main Component
for Automotive
(ex. machinery, brake,
transmission system) Opportunities
• Shifting of 2W to 4W
Internal Combustion • 2nd biggest production in
Engine (ICE) Vehicle Southeast Asia
(especially MPV, Van, LCGC, • The biggest domestic market in the
and truck) regions
• Shifting of industry to EV
Technology and
Component of
Electric Vehicle

Source: MoI, edited


9
Low Carbon Emission Vehicle (LCEV) Policy in Indonesia

Source: MoI
10
Indonesia Investment Policy for Automotive Industry

11
Indonesia Automotive Industry Policy

Source: MoI, edited


12
Indonesia Automotive Industry 4.0 Policy

Source: MoI, edited


13
Indonesia Automotive Industry Roadmap

Source: MoI, edited


14
Indonesia’s Priority Sectors for Investment

Source: BKPM, edited


15
Investment Policy on Automotive Industry in Indonesia

Negative Investment List (Presidential Regulation No 44 of 2016)

49% FDI
Car maintenance and
100% FDI or DDI 100% FDI or DDI repair

Automotive Automotive 100% DDI


Industry Component Retail trade of cars,
motorbikes and
Production, and Industry commercial vehicles
assembly
100% DDI
Retail trade of car parts
and accessories,
motorbikes and
commercial vehicles

100% DDI
Land Transportation
Equipment Rental (Rental
without Operator)

Source: BKPM, edited


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Investment Incentives on Automotive Industry in Indonesia (1)

Tax Holiday Mini Tax Holiday Tax Allowance


(Finance Ministry Regulation No. 150/PMK.010/2018) (Finance Ministry Regulation No. (Government Regulation No. 9 of 2016)
• The deduction of corporate income tax on income from
150/PMK.010/2018)
main business activities amounts to 100% of the total • 5 years for 50% tax reduction. • 30% of investment value.
corporate income tax payable. • With another 25% tax exemption for • Reduction of corporate net income tax for 6
• USD 38 million (IDR 500 billion) minimum investment additional 2 years (transitional years, 5% each year.
value. period).
• After enjoying a 100% discount on corporate income tax, • USD 7.6 million (IDR 100 billion) Eligible to
can be given another 50% discount for the next 2 years. minimum investment value. 1 4 or more wheel 29100 Public transportation for > 42
• Eligible given for pioneer industries: manufacture of vehicle industry passengers and/or trucks
motor vehicle and main components for motor
2 Carosery industry 29200 Manufacturing of parts of car
vehicle), with types of production:
for 4 or more or vehicle carosery
1. Integrated 4-wheeled or more electric vehicle manufacturing wheel vehicle
with battery and electric motor. industry and
2. Manufacturing of battery for 4-wheeled or more electric motor trailer and semi
vehicle. trailer industry
3. Manufacturing of electric motor for 4-wheeled or more electric
motor vehicle.
3 Manufacture of 29300 Engine and engine part, brake
4. Manufacturing of 100% biodiesel fitted flexy engine for 4- spareparts and system, axle & propeller shaft,
wheeled or more motor vehicle. accessories for 4 transmission/clutch systems,
5. Integrated 2 (two) main components minimum for engine of 4- or more wheeled steering system, injector,
wheeled or more motor vehicle (i.e. piston, cylinder head, vehicles water pump, oil pump, fuel
cylinder block, camshaft, crankshaft, and connecting rod) pump, forging component, die
manufacturing, with 4-wheeled or more motor vehicle casting component, stamping
industry. part, etc
6. Manufacturing of electric power control unit (PCU) for 4-
wheeled or more electric motor vehicle. 4 Manufacture of 30912 Engine and engine part, die
7. Manufacturing of battery for 2-wheeled or 3-wheeled electric component and casting component, brake
motor vehicle; equipment for two system, transmission system
8. Manufacturing of electric motor for 4-wheeled or 3-wheeled or three wheeled
electric motor vehicle; motorcyle
9. Manufacturing of electric power control unit (PCU) for 4-
wheeled or 3-wheeled electric motor vehicle.

Source: various, edited


17
Investment Incentives on Automotive Industry in Indonesia (2)

Incentives and Ease for Investment


Super Deductible Tax by Regional Government
(Government Regulation No 45/2019) (Government Regulation No. 24 of 2019)

• Reduction of net income by 60% • Provide incentives can be: • Provide ease can be:
of the total investment. • Reduction, relief, or • Providing of data and information on investment
• The most gross income reduction exemption on local tax; opportunities;
high of 200% of the total cost • Reduction, relief, or • Providing of facilities and infrastructure;
incurred for work practice exemption on local • Facilitating of land or location supply;
activities, apprenticeship, and/or retributions;
learning. • Providing of technical assistance;
• Providing of capital aid to • Simplification and acceleration of licensing through one-
• The highest gross income micro, small, and/or
reduction of 300% of the total stop integrated services;
cooperative businesses
costs incurred for research in the regions; • Ease of access to marketing products;
activities and certain • Ease of direct construction on investment;
developments in Indonesia. • Assistance for research
and development for • Ease of investment in strategic areas stipulated in
micro, small and/or legislation that has the potential for regional
cooperative businesses development;
in the regions; • Providing of investment comfort and security in the
• Assistance for micro, regions;
small and/or cooperative • The ease of the certification and standardization
vocational training process refer to provisions of legislation;
facilities in the region; • Ease of access to ready-to-use and skilled workers;
and/or
• Ease of access to raw material supplies; and / or
• Low interest loans.
• Promotion facilitation base on regional authority.

Source: various, edited


18
Investment Incentives on Automotive Industry in Indonesia (3)

Fiscal Incentives in Special Economic Zones

SEZ Manufacture Industry*

Tax Holiday Entering of Import Releasing export goods


Goods:
Tax
• Suspension of import Export:
Import Duty Allowance duty; • General conditions
• Excise Exemption apply
Fiscal • Taxes in the Import
Framework (PDRI) are To Domestic Market:
Value
not collected* • Import Duty = 0 if the
Customs Added Tax level of domestic
From Custom Areas: content is greater or
Inland FTA • VAT and Sales Tax on equivalent with 40%
Luxury Goods are not • Repayment of indebted
collected Value Added Tax
• VAT levies for
submission of taxable
*term and condition applied goods
Source: various, edited
19
Investment Facilities on Automotive Industry in Indonesia (1)

Import Duty Facility Green Lane Facility


(Finance Ministry Regulation No.176/PMK.011/2009)
jo. No. 188/PMK.010/2015)
Import Facility for Capital Goods
• Industries that can be given this facilities include:
• Industries that produce goods; and / or New Facility: Status upgrade
• Industries that produce services (Tourism and culture, From RED to GREEN line for new companies under
Transportation / transportation (for public transport construction
services), Public health services, Mining, Construction,
Telecommunication Industries and Ports). • Acceleration and certainty in custom clearance process.
• Import duty facility on import of machinery for 2-year import • Faster and certain:
period, and may be extended according to project
completion period in principle of investment permit. • Capital goods do not require screening.
• Exemption of import duty on the import of goods and • Cutting the processing time from 3-5 days to only 30
materials for the needs of 2 years of production and can be minutes.
extended the import time limit for one year. • Simple requirements:
• Development by increasing the capacity of at least 30% of • Projects under construction.
the installed capacity is given facility of import of raw • Obliged in reporting quarterly investment activities
materials for 2 years production needs, can be extended (LKPM).
the import time limit for one year. • Recommendation from BKPM.
• Companies using domestic production machinery min.
30% are given import facility of raw material for 4 years of
production requirement, can be extended the import time
limit for one year.

Eligible to
Automotive Industry and Its Component
Source: various, edited
20
Investment Facilities on Automotive Industry in Indonesia (2)

Online Single Submission (OSS) Facility


The Online Single Submission (OSS) is a business-licensing system aimed at making it simpler
to do business, particularly to register your business and to obtain the provisional licenses you
need to operate your business.
OSS can be accessed via this link: www.oss.go.id

A.NEW USER B. NEW USER


(New Registration) (Re-registration)
National
Obtaining Licenses/Permit Task Force
Related to Investment
Activity in Indonesia
Corporate
 Single Business
www.oss.go.id
Number (NIB)
 Business Ministry
Licenses Task Force
 Commercial/
Operation
License
 etc. Provincial/
Municipally
Individual Task Force

21
Acceleration of Electric Motor Vehicles Program Battery Based
(Battery Electric Vehicle/BEV) for Road Transportation
Regulation of The President of The Republic of Indonesia
Number 55 of 2019

22
Battery Electric Vehicle/BEV Coverage

2 or 3 wheeled BEV 4 or more wheeled BEV

23
Measures to Acceleration of Electric Motor Vehicles Program Battery
Based (Battery Electric Vehicle/BEV) for Road Transportation

Accelerating the development of local BEV industry

Granting of incentives

Providing of electricity charging infrastructure and


setting of electricity tariffs for BEV

Compliance with technical provisions for BEV

Protection of the environment

24
Local Content of BEV

BEV industry, and BEV’s component industry must prioritize use local content
with the following criteria:
• Minimum local content for 2 and/or 3 wheeled BEV:
• 40% (2019-2023);
• 60% (2024-2025); and
• 80% (> 2025).
• Minimum local content for 4 or more wheeled BEV:
• 35% (2019-2021);
• 40% (2022-2023);
• 60% (2024-2029); and
• 80% (> 2029).

The procedure for calculating local content shall be determined by


the minister of industry

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Production of BEV

BEV production carried out by:


• the company of BEV manufacturing industry;
• the company which established under Indonesian law and
operates in territory of the Republic of Indonesia;
• the company which has an industrial business license to
assemble or producing of BEV.

26
Production of BEV’s Component

BEV’s component production carried out by:


• the company of BEV’s component manufacturing industry;
• the company which established under Indonesian law and
operates in territory of the Republic of Indonesia;
• the company which has an industrial business license to
assemble or producing of main components and/or supporting
components for BEV according to the provisions of the
legislation.
In the case of the BEV’s component industry is not yet capable produce main components and/or
supporting components for BEV
• BEV industry can procure components derived from the imported types Incompletely Knock Down
(IKD) and/or Completely Knock Down (CKD).
• BEV component industry can procure components derived from the imported types Incompletely
Knock Down (IKD).

The provision regarding Incompletely Knock Down (IKD) and Completely Knock
Down (CKD) shall be determined by the minister of industry

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Possibility to Import of BEV in Completely Built-Up (CBU)

• The BEV industry that will build manufacturing facility may


conduct procurement of BEV from import in CBU.
• CBU imports may only be done in a certain period and
amount since the start of the construction of the
manufacturing facility.

Further provision regarding certain period and amount shall be determined by the
minister of industry, the minister of trade, and the minister of finance

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Incentives for Acceleration Program of BEV (1)

Incentives can be given by Central Government and Regional Government to:


• Industrial companies, universities, and/or research and development institutions that carry out
research, development and technological innovation activities as well as BEV industry
vocations;
• Industrial companies that prioritize the use of prototypes and/or components sourced from
industrial companies and/or research and development institutions that conduct research,
development and technological innovation activities as well as BEV industry vocations in local;
• Industrial companies that meet local content and locally produce BEV;
• BEV’s component manufacturing company;
• Industrial company of BEV with national brand;
• The company that provides battery swap for electric motorcycle;
• Industrial companies that accelerate production and prepare facilities and infrastructure for the
use of BEV;
• Companies that manage battery waste;
• Companies providing public charging station for electric vehicles (SPKLU) and/or agencies or
dwellings that use private electricity installations to charge BEV;
• Public transport companies that use BEV; and
• Individuals who use BEV.
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Incentives for Acceleration Program of BEV (2)

Fiscal incentives include: Non-fiscal incentives include:


• Import duty on the import of BEV regarding Completely Knock Down • Exceptions from restrictions on the
(CKD), Incompletely Knock Down (IKD), or a major component for a use of certain roads;
specified number and period of time; • Delegation of production rights to
• Sales tax on luxury goods; technology related to BEV, whose
• Exemption/reduction of central and regional taxes; patent license has been held by the
Central Government and/ or Regional
• Import duties on the importation of machinery, goods and materials in Governments; and
the context of investment;
• Guidance on security and/or security
• Suspension of import duties in the framework of export; of operational activities of the
• Government-borne import duties (BMDTP) on the importation of raw industrial sector for the continuation or
materials and / or supporting materials used in the framework of the smoothness of logistics and/or
production process; production activities for certain
industrial companies which are
• Manufacture of public charging station for electric vehicles (SPKLU)
national vital objects.
equipment;
• Export financing;
• Fiscal incentives for research, development and technological
innovation activities as well as vocational of the BEV’s component;
Central Government and
• Parking fees at locations determined by the Regional Government;
Regional Government
• Electricity fee reduction at SPKLU;
can give additional fiscal
• Supporting financing for SPKLU infrastructure development; and non-fiscal incentives
• Professional competency certification for BEV industrial human
resources; and
• Product certification and/or technical standards for the BEV industrial
company and the BEV’s component industry.
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Providing of electricity charging infrastructure and
setting of electricity tariffs for BEV
• The electricity charging infrastructure for BEV includes:
• charging facilities, at least electrical power supply equipment; current, voltage and
communication control systems; and protection and security systems; and/or
• battery swap facility.

• Providing of electricity charging infrastructure for BEV can be carried out by state-owned enterprises (SOEs)
in the energy sector and/or other business entities.
• For the first time, providing of electricity charging infrastructure for the BEV was carried out through an
assignment to PT PLN (Persero0 that could work together with SOEs and/or other business entities.
• Electricity sales at SPKLU can be carried out by:
• the holder of a business license for supplying electricity that has a business area; and/or
• the holder of a business license for supplying electricity that has a business area by cooperating
with a state-owned enterprise in the energy sector or other business entities.
• To accelerate providing of electricity charging infrastructure, it is provided convenience to adjust electrical
installations to electricity customers who use BEV as well as the construction of SPKLU and/or battery
exchange locations in public places.

Electricity tariffs imposed on charging electricity for BEV set by


the minister of energy and mineral resources.

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BEV Technical Provisions

• Every BEV imported, produced, and/or assembled in local to be operated and the
type must be registered and fulfilled BEV identification number provisions.
• Every BEV is operated on the road must meet technical and roadworthy
requirements.through BEV Type Test and BEV Periodic Test.
• BEV industry and/or BEV’s component industry is required to provide warranty
and after-sales service.
• Every BEV must be registered accordingly with the provisions of the legislation in
field of traffic and road transportation.

32
Handling of BEV’s Battery Waste

• Handling on battery waste from BEV must be done by recycling


and/or management.
• BEV’s battery waste management implemented by institutions, the
BEV industry, and/or BEV component industry in domestic that have
management license on waste batteries from BEV.
• Institutions, BEV industry, and/or BEV components industry in
domestic which conducts waste battery handling from BEV can be
given appreciation towards environmental contributions.

33
Indonesia Investment Promotion
Centre (IIPC)

Terima Kasih
Thank You
Badan Koordinasi Penanaman Modal
(BKPM)
Indonesia Investment Coordinating Board
Jalan Jenderal Gatot Subroto No. 44
Jakarta 12190 - Indonesia
t +62 21 525 2008 | f +62 21 525 4945 | e info@bkpm.go.id

bkpm.go.id |
investindonesia.go.id 34